A note from Bob Arundell:

The SC State Legislature determines to what owners property taxes apply.  During the due and cry when voters were clamoring for property tax relief(Remember California’s Proposition 13?), the SC State Legislature granted resident homeowners an exemption from paying school operations taxes. To replace those funds, the State Legislature added a 1% sales tax that goes directly to fund school operations.

One problem is that the sales tax did not bring in as much money as the property tax relief granted to resident homeowners took away. The local school board looked into imposing what is called an “impact fee” on all new construction to divert some of the cost of building new schools; however, as it turns out, the State Legislature also prohibits school districts from imposing impact fees. The local district also does not have the authority to alter the sales tax rate. Finally, in an effort to send more funds to the poorest school districts in the state, the SC Legislature passed a law that allocated the state’sgeneral public education funds based on the relative “wealth” of each county.  A county’s “wealth” is determined by looking at its total property tax base (i.e. the fair market value of all real estate in the county.) By virtue of its resort, beach oriented nature, Beaufort County was ranked as the”wealthiest” county. As a result, the local school district’s allocation of the state’s general public education funds went from a high of about $35 million to zero last year.

The bottom line is this: The Beaufort County School District is charged with educating about 20,000 students. The only source it has to increase revenues for operations is to raise the tax mill on commercial and non-resident property owners. The good news is that for the coming year, the school district has set the commercial and non-resident property owners at a level that is 10.2% LOWER than the year before! Because property values were re-assessed for the coming tax bills, the school district believes that those whose property values increased by no more than the county average (11.4%) will not have a tax increase for the coming year.

As there are far more “poorer” counties than there are “wealthy” ones, there are not enough votes to change the laws right now. Out of state owners should complain to the U.S. Congressman or Senator about how they are being discriminated for being an out-of-state property owner.

Hope this answers the question.

Bob Arundell

Tax Attorney and CPA